Bands I've seen at the Palace include Tomahawk (x3), Melvins (x2), Fantomas (x3), Mr Bungle. They've all played there many more times than I've seen them. Who else? Nirvana, Radiohead, Placebo, a ton of DJs.
I don't believe there are any other decent venues of a similar size in Melbourne (I hate the HiFi Bar). Festering Hole doesn't count. The Palace had PARKING! Parking... in St. Kilda! That isn't something you want to see go!
Sign the Save the Palace Petition here.